Filing and reporting period
The supplied filing is Spatializer Audio Laboratories, Inc.’s Form 10-K for the year ended December 31, 2012, filed February 28, 2013. It does not appear to be an Enveric Biosciences filing or a quarterly report for 2012 Q4; verify the issuer and filing before relying on this summary.
Spatializer had sold substantially all operating assets in 2007 and reported that it had been a shell company since then, with no employees and no operating business.
Financial performance and position
| Metric | 2012 | 2011 |
|---|---|---|
| Revenue | $0 | $0 |
| Operating expenses | $22,690 | $31,395 |
| Net loss | $24,621 | $33,380 |
| Cash and cash equivalents at year-end | $1,381 | $18,231 |
| Working capital | $(20,066) | $4,555 |
| Net cash used in operating activities | $24,850 | $30,346 |
Revenue and operating margins are not meaningful because the company had no revenue. Year-end current liabilities were $25,666, including $17,666 in accounts payable and accrued liabilities and $8,000 in loans from stockholders. Total assets were $5,600. No interest expense or interest paid was reported. The filing does not provide a meaningful operating-business outlook or margin guidance.
Changes, outlook, and risks
- Operating expenses fell year over year, primarily due to lower general and administrative expenses; net loss narrowed by $8,759.
- Cash declined by $16,850 during 2012. Financing included $8,000 in stockholder loans; operating cash use exceeded this funding.
- Management said the company could not maintain liquidity without a new business model and outside funding or continued support from stockholder/officers. The auditor identified substantial doubt about the company’s ability to continue as a going concern. The statements include no adjustments for the possible outcome.
- In January 2013, President Jay Gottlieb provided an additional interest-free $12,000 loan. Management stated the company had no present plan to dissolve and was retaining any earnings, if available, while considering a sale of the shell or a merger.
- Approximately $9.6 million of federal net operating loss carryforwards were reported, potentially available through 2031, subject to annual and ownership-change limitations. A full valuation allowance was recorded against deferred tax assets.
- The company warned that OTCQB trading was thin and volatile, which could make shares difficult to sell. No legal proceedings were reported. No dividends were planned.
- The auditor issued an unqualified opinion on the financial statements but emphasized the going-concern uncertainty. Management reported disclosure controls and internal control over financial reporting as effective; the auditor did not attest to internal-control effectiveness.
Key facts for investors to verify
- Confirm the filing belongs to the intended company: the supplied document names Spatializer Audio Laboratories, Inc., not Enveric Biosciences, Inc.
- Verify the company’s current operating status, funding arrangements, and ability to meet obligations, given the $1,381 year-end cash balance, negative working capital, and disclosed going-concern uncertainty.
- Review the stockholder/officer loans, including the $8,000 outstanding at year-end and the subsequent $12,000 January 2013 advance.
- Check current share count and ownership: the filing reported 12,142,000 shares outstanding and insiders as a group beneficially owning 61.35% as of February 28, 2013.
- Assess whether the reported tax-loss carryforwards can be used, given the stated limitations and full valuation allowance.